Erich's Update for Tuesday, October 4, 2005
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Market Update for Tuesday, October 4, 2005
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"If you're going to be thinking anyway, you might as well think big." - Donald Trump
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1: CURRENCIES
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December Australian Dollar ADZ5
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The Aussie buck stalled out today and never got close to finding our entry, so we're still flat this market. I'll be running the same trade again tomorrow, just in case we see a rally above resistance.
*BUY December Australian Dollar at 7627
*Stop 7597
*Approximate Risk Exposure: $300 per contract
*Profit Target: 7725
*Approximate Profit Potential: $990 per contract
*RRR: 3:1 *Degree of Risk: HIGH
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December British Pound BPZ5
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The Pound continued lower today as expected; however we wouldn't have sold this market because of the opening gap. The small range today gives us another chance to sell again tomorrow, but I'm a little concerned about the support at the 175.25 gap, which was near today's close.
*SELL December British Pound at 174.97
*Stop 175.37
*Approximate Risk Exposure: $250 per contract
*Profit Target: 173.27
*Approximate Profit Potential: $1060 per contract
*RRR: 4:1
*Degree of Risk: HIGH
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December Canadian Dollar CDZ5
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After our nice fill to the upside the other day, the Canadian Dollar reversed on us, stopping us out with $360 profit per contract. RSI is dipping lower, and we'll likely get another signal to buy in a day or two.
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December EuroFX ECZ5
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Over the weekend I was debating doing something with the EC, and it turns out I should have as the market made a textbook break of support today. Rates are trading at the contract lows, so we could see a bounce here tomorrow.
I'll look to sell if they continue lower but I'm trying to give the market plenty of room on the entry, but even so I'm a little nervous about the trade.
*SELL December EuroFX at 119.07
*Stop 119.57
*Approximate Risk Exposure: $625 per contract
*Profit Target: 117.27
*Approximate Profit Potential: $2250 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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December Japanese Yen JYZ5
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The Yen continued its beautiful decline today. If you had a profit taking order in place you would have been stopped out at the open with just over $2000 in profit per contract. If you're trailing your stops you'll want to bring them just above 8900 for tomorrow's session.
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December Mexican Peso MPZ5
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I'm not quite sure what to make of the Peso, but one thing's for certain, we're up against strong resistance at the 92200 - 92300 range. If we see a reaction tomorrow I'll place buy orders above the resistance.
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December Swiss Franc SFZ5
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Another tough call in the Swissy today as the market gapped our entry by a mere 4 points. If you passed on the trade you'll have another chance to sell tomorrow. If you're in the trade you'll want to leave stops where they are for one more session - if you can afford the risk.
*SELL December Swiss Franc at 7713
*Stop 7753
*Approximate Risk Exposure: $500 per contract
*Profit Target: 7557
*Approximate Profit Potential: $1950 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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December US Dollar Index DXZ5
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The USD had a pretty strong day today as rates made a nice break above resistance. I'll look to buy the market on a continuation, but only above the contract highs at 9030.
*BUY December US Dollar Index at 9043
*Stop 8997
*Approximate Risk Exposure: $460 per contract
*Profit Target: 9225
*Approximate Profit Potential: $1820 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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2: ENERGIES
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November Unleaded Gas HUX5
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Gas prices are beginning to look a lot more bearish, and while the market is technically still in an uptrend I would look for a chance to sell Gas soon.
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December Heating Oil HOZ5
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Got $500 bucks you don't know what to do with? If you do you might consider selling Heating Oil below today's support. Yes, I know the market is still in an uptrend, but the trend is not as strong as it was and the hook in RSI makes me think we could see a quickie reversal to trendline support at 199.
*SELL December Heating Oil at 208.50
*Stop 209.60
*Approximate Risk Exposure: $462 per contract
*Profit Target: 199.10
*Approximate Profit Potential: $3950 per contract
*RRR: 8 1/2:1
*Degree of Risk: HIGH
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December Crude Oil CLZ5
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Crude is giving us the same look as Heating Oil, but here we have the added benefit of already being in a bear market - at least technically. I will look to see the support of the last few days at 6490 and cover the trade above the nearby resistance at 6500.
Eventhough the trade is really tight, we still have $450 at risk per contract. First profit target is 6200, but watch for a hesitation off the 6390 zone.
*SELL December Crude at 6465
*Stop 6510
*Approximate Risk Exposure: $450 per contract
*Profit Target: 6205
*Approximate Profit Potential: $2600 per contract
*RRR: 5 1/2:1
*Degree of Risk: Moderate to HIGH
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3: FINANCIALS/INDICES
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September (06) Eurodollar EDU6
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Darn Eurodollar is starting to tick me off as it had another strong day today. I'm still on the sidelines, waiting for the market to show us it's safe to enter. It can't be long now though...the ED normally doesn't go too far without stopping to catch its breath.
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December mini-DOW YMZ5
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The DOW is likely to continue higher for the short term, but I still think we've got a big sell coming up in the next few days. Keep watching your RSI for a signal when to get in.
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December mini-NAS NQZ5
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The NAS is looking a little more bearish than the DOW, but I don't think it's quite ripe enough to sell. I'll give it at least one more day.
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December mini-S&P ESZ5
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The S&P resembles the DOW more than the NAS today. I think we will also see a continued rally for the short term, but the better potential lies in waiting for a sell signal.
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4: GRAINS
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December Corn CZ5
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Given how choppy corn has been I have to admit that I'm more than a little gunshy about buying into the market. I'd feel better if we already saw a reaction to the recent rally, but we might not get one. Therefore I'll look to buy on a break of the 210 resistance above the market.
*BUY December Corn at 210 3/4
*Stop 206 3/4
*Approximate Risk Exposure: $200 per contract
*Profit Target: 229 3/4
*Approximate Profit Potential: $950 per contract
*RRR: 4 1/2:1
*Degree of Risk: HIGH
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December Oats OZ5
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Oats gapped our entry today and voided the buy order. To make matters worse today's session was a total fade by the bears, and as such we could see a lower session tomorrow.
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November Rice RRX5
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While Rice remains very overbought, we did see the market show us support today off teh 715 area. I would like to see prices continue lower, but I'll trail a buy order in case we see the rally resume early.
*BUY November Rough Rice at 732
*Stop 725.5
*Approximate Risk Exposure: $130 per contract
*Profit Target: 751.5
*Approximate Profit Potential: $390 per contract
*RRR: 3:1
*Degree of Risk: Moderate
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December Soybean Meal SMZ5
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We're still hanging in with our bean meal short...but just barely. I'd really like to see the market head lower, but continued pressure from bean oil and the big bean market is making a reversal more likely.
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December Soybean Oil BOZ5
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Another big day in Bean Oil today. I think we're going to see a bit of profit taking tomorrow however, especially now that we're trading right at 2500's resistance.
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November Soybean SX5
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The big Bean market rallied today. I don't think prices have too far to go before we have another crack at this market. I'm thinking the resistance at 595 is likely to give beans some pause.
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December Wheat WZ5
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Good ole wheat traders, you can always count on them to second guess themselves after a big rally. Their hesitation shows us where the resistance is, and where we need to enter a long position from.
*BUY December Wheat at 354 1/4
*Stop 350 3/4
*Approximate Risk Exposure: $175 per contract
*Profit Target: 364 3/4
*Approximate Profit Potential: $525 per contract
*RRR: 3:1
*Degree of Risk: Moderate
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5: MEATS
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October Feeder Cattle FCV5
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Feeders took off again today. I can't believe the prices they're trading at. Still on the lookout for resistance so we can get onboard.
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October Live Cattle LCV5
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Cattle hesitated today and showed us resistance at the 8940 line. I will look to buy this market long tomorrow on a break above the 8950 resistance and try to trade it to the weekly level at 9200.
*BUY October Live Cattle at 8962
*Stop 8892
*Approximate Risk Exposure: $280 per contract
*Profit Target: 9187
*Approximate Profit Potential: $900 per contract
*RRR: 3:1
*Degree of Risk: Low to Moderate
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December Lean Hogs LHZ5
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Hogs made a big bounce off support today. I wasn't expecting that. I thought we'd see a reversal come off the 6200 support, but I guess not. Keeping a lookout for another chance to buy.
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6: METALS
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December Copper HGZ5
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Yep, there goes copper again. If the pattern holds true we should see another lower session tomorrow. If we get it I'll look to buy the low the day after.
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December Gold GCZ5
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Gold's right at trendline support today. A higher session tomorrow will get me looking to buy again on Wednesday.
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December Silver SIZ5
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Ditto for silver.
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7: SOFTS
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December Cocoa CCZ5
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Strange little day in cocoa today as prices fell off, but were bullish overall. I wouldn't mind seeing prices continue lower, but there's possible support from last week's gap, so I'll hold off one more day.
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December Coffee KCZ5
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Coffee is all over the place making it really difficult to take a position. I'll keep watching tomorrow.
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December Cotton CTZ5
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We got the RSI bounce this morning but cotton didn't trade high enough to find our order. No problem, we'll just run the trade again tomorrow.
*BUY December Cotton at 5463
*Stop 5413
*Approximate Risk Exposure: $250 per contract
*Profit Target: 5667
*Approximate Profit Potential: $1020 per contract
*RRR: 4:1
*Degree of Risk: Moderate to HIGH
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November OJ OJX5
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We got a nice fill in OJ today as prices easily broke the 103 resistance. Bring stops to breakeven for tomorrow (or just below today's low if you want to give the trade a little more room). First target is resistance at 109.
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October Sugar SBV5
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Sugar continues to mock me making a huge breakout through the top of resistance today. Okay sugar, you ask for it. Watch for a killer sugar trade in the next day or two.
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